November 3rd will be one of the most contested and important elections in our nation’s history. There is a strong contrast between the policy of President Donald Trump and that of his Democratic rival, former Vice President Joe Biden. What’s at stake for the mortgage industry in the election 2020 results?
President Donald Trump’s Policy on Mortgage
“When President Trump first came into office, he made it very clear that he wanted a deregulatory agenda,” says Carrie Hunt, executive vice president of government affairs and general counsel for the National Association of Federally-Insured Credit Unions.
If President Donald Trump wins four more years, the push to limit the government’s role in the economy will move the full swing. The Trump administration is pushing for the return of Fannie Mae and Freddie Mac to private hands, and this will probably be accomplished during his second term.
Republicans are saying that it is about time for the government to play a smaller role in backstopping the mortgage market. They are also rationalizing that any increase in rates would be relatively small.
“If the president is re-elected, we would expect a continuation of the policies that he and his administration have tried to implement over the last four years,” Donovan says. “The Biden administration would take a very sharp eye to the changes that have been made over the last four years.”
Joe Biden’s Policy on Mortgage
In stark contrast, Democratic candidate Joe Biden and his party are in no hurry to return Fannie Mae and Freddie Mac to private hands. His focus is to use the companies to boost housing affordability and promote homeownership. The Biden camp is saying that this approach would be better because President Trump’s privatization move will increase mortgage rates.
On banking, Biden includes in his campaign the promise to reinstate Dodd-Frank-era Financial reforms. This is one of the reforms that he has been championing during the Obama era. He is also proposing greater oversight on consumer lending through credit cards and regulating “usurious” interest rates.
If Biden wins, we might see the resurgence of the powers of the Consumer Financial Protection Bureau (CFPB) particularly in cracking down on abusive or deceptive lending practices. He aims to make borrowing costs transparent by zip code.
We might also see an update on the CRA, particularly its application to mortgage and insurance companies. Biden wants to mandate that financial services firms outline their public interest commitments while also ramping down on loopholes that prevent firms from investing in community development.
It is up to the mortgage industry leaders, thinkers, and participants to decide which is better for them. Whoever they vote on November 3rd will surely affect the future of the mortgage industry. So what we all should do is weigh the options we have and decide come election day which one of them is the best for the mortgage industry.
- “Where Trump and Biden Stand on Mortgage Finance,” Realtor.com
- “Here’s what a Trump or Biden presidency would mean for banking,” Bankrate